Calls For Public Discussion On Loans
One of the greatest shake ups of the home owner loan and mortgage market in the past few years has been the latest proposals from the Financial Services Authority (FSA) in its Mortgage Market Review (MMR).
The idea behind the MMR is to offer a greater level of protection for consumers who are taking out a home owner loan and to ensure the problems of irresponsible lending which have been seen in the recent past, are avoided in the future, thereby reducing the level of loan arrears and repossessions.
As part of the review, the FSA has proposed that there should be a complete ban placed on self certification loans and fast track loans, where a consumer does not provide proof on income and possibly a ban on interest only loans, as well as other measures.
Although the proposals are designed to protect loan customers, many experts feel that the new rules would be too restrictive and have a negative impact on the home owner loan market as a whole and could probably stop many individuals from entering the market at all.
Lord Turner, chairman of the FSA, said that there needed to be debate around the new proposals for changes to the home owner loan market and the Council of Mortgage Lenders (CML) has called for a public debate on the matter.
The CML believes the proposals will force many lenders to leave the home owner loan market and will restrict choice, pushing up prices and making it harder for consumers to obtain a loan.
A spokesperson for the CML said “We understand that regulatory change is inevitable, but we are concerned that not enough thought has been put into its likely market impact.”
“We agree with Lord Turner that a wide ranging public debate about what sort of a mortgage market consumers want will ensure the public understands the effects these changes are likely to have on their ability to become or continue as home owners.”
